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Practice Exam IIA-CIA-Part2 Realistic Dumps Verified Questions
NEW QUESTION # 119
An internal audit team leader is having difficulties completing the planning phase of an assurance engagement because the business unit lacks a system of internal controls. Which of the following is the most appropriate course of action for the internal audit team leader?
- A. Add a consulting component to the already scheduled assurance engagement
- B. Change the scheduled engagement from assurance to consulting to help correct the shortcomings
- C. Seek the involvement of the external auditor to assist with improving the internal controls
- D. Defer the engagement until a system of internal control has been established
Answer: A
NEW QUESTION # 120
Which of the following tests must an internal auditor perform in order to ensure that inbound electronic data interchange (EDI) transactions are received and translated accurately?
I. Computerized tests to assess transaction reasonableness and validity.
II. Review of log books to ensure that transactions are logged upon receipt.
III. Edit checks to identify unusual transactions.
IV. Verification of limitations on the authority of users to initiate specific EDI transactions.
- A. I, II, and III only
- B. II and III only
- C. I, II, III, and IV.
- D. I and IV only
Answer: A
Explanation:
Section: Volume B
NEW QUESTION # 121
A payroll clerk enters payroll transactions into the general ledger. The staff accountant reconciles the payroll ledgers. The payroll manager issues the manual payroll checks. The checks aremaintained in a locked cabinet. The chief financial officer secures the keys to the cabinet. The payroll clerk distributes the manual checks.
The payroll manager reconciles the bank statements monthly. Which of the following audit steps best addresses the risk of fraud in the payroll process?
- A. Examine whether the payroll manager approves the reconciliations of ledgers.
- B. Determine whether the cabinet keys are secured properly.
- C. Determine whether an approved list of voided checks exists.
- D. Vouch a sample of items on bank reconciliations to supporting documentation.
Answer: D
NEW QUESTION # 122
Insurance companies often receive electronic hospitalization claims directly from hospitals. Which of the following control procedures would be most effective in detecting fraud in such an environment?
- A. Use generalized audit software to match the claimant identification number with a master list of valid policyholders.
- B. Use integrated test facilities to test the accuracy of processing in a manner that is transparent to data processing.
- C. Develop monitoring programs to identify unusual types of claims or an unusual number of claims by demographic class for investigation by the claims department.
- D. Develop batch controls over all items received from a particular hospital and process those claims in batches.
Answer: C
NEW QUESTION # 123
An organization is expanding into a new line of business selling natural gas. The internal auditor is planning an engagement and wants to obtain a general understanding of the natural gas market the market share that the organization wants to win, and the competitive advantage that the organization may have. Which of the following would be the best source of such information?
- A. Conduct internet searches on gas sales and analyze market players
- B. Review gas clients' portfolio and compile statistics on sales margins
- C. Analyze the organization's revenues and calculate the proportion of gas
- D. Interview responsible managers and read strategic documents
Answer: B
NEW QUESTION # 124
In a client satisfaction survey for an internal audit engagement, client management should be asked to assess which of the following factors?
I. Audit team's knowledge of the audited area.
II. Usefulness of the audit results.
III. Quality of management of the internal audit activity.
IV.
Clarity of the scope and objectives of the audit engagement.
- A. I, II, and IV only
- B. II and IV only
- C. I and II only
- D. I, III, and IV only
Answer: A
NEW QUESTION # 125
An internal auditor is planning an assurance engagement. The auditor first reviews the department's business objectives. What is the next step?
- A. Review control activities.
- B. Establish risk management roles.
- C. Evaluate potential risks.
- D. Set the scope of the engagement.
Answer: C
NEW QUESTION # 126
After issuance of the engagement final communication for an audit of an organization's accounts payable function, which of the following should be sent satisfaction surveys?
I. Manager of disbursements.
II. Controller.
III. Chief operating officer.
IV.
Audit committee members.
- A. I and II only
- B. II and III only
- C. I only
- D. II, III, and IV only
Answer: A
NEW QUESTION # 127
During the planning phase of an assurance engagement, an internal auditor seeks to gam an understanding of now when the area under review is accomplishing its objectives When of the Following information-gathering techniques is the auditor most likely to use?
- A. A walkthrough of the key processes of the area under review.
- B. A review of the key performance indicators of me area under review.
- C. An interview with the manager regarding the area's business plan.
- D. A review of previous audit and follow- up results of the area under review
Answer: A
NEW QUESTION # 128
The balanced scorecard approach differs from traditional performance measurement approaches because it adds which of the following measures?
I.Financial measures.
II.
Internal business process measures.
III.
Client satisfaction measures.
IV.
Innovation and learning measures.
- A. III and IV only.
- B. II and IV only.
- C. I only.
- D. II, III, and IV only.
Answer: D
NEW QUESTION # 129
'Internal policy prohibits employees from entering into contacts with financial obligations without proper approval.
A project manager signed a change to an important service agreement without obtaining the proper approval As a result the organization is receiving $5,000 per month less for its services.'' Which of the following should be added to the observation?
- A. A description of what constitutes proper approval
- B. The reason for not following the internal policy
- C. The annual impact of the changed agreement on cash flows
- D. Details regarding when the change to the agreement was signed
Answer: A
NEW QUESTION # 130
During a payroll audit of a large organization, an internal auditor noted that the assistant personnel director is responsible for many aspects of the computerized payroll system, including adding new employees in the system; entering direct-deposit information for employees; approving and entering all payroll changes; and providing training for system users. After discussions with the director of personnel, the auditor concluded that the director was not comfortable dealing with information technology issues and felt obliged to support all actions taken by the assistant director. The auditor should:
- A. Review the engagement program to ensure testing of direct deposits to employee bank accounts is adequately covered.
- B. Continue to follow the engagement program because the engagement scope and objectives have already been discussed with management.
- C. Recommend to the chief audit executive that a fraud investigation be started.
- D. Test a sample of payroll changes to ensure that they were approved by the assistant director before being processed.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION # 131
Which of the following has the greatest effect on the efficiency of an audit?
- A. The complexity of deficiency findings.
- B. The adequacy of preliminary survey information.
- C. The method and amount of supporting detail used for the audit report.
- D. The organization and content of workpapers.
Answer: B
Explanation:
Section: Volume E
NEW QUESTION # 132
Which of the following is not relevant when developing recommendations for inclusion in audit reports?
- A. Timing of follow-up.
- B. Underlying causes.
- C. Feasibility.
- D. Cost of implementation.
Answer: A
NEW QUESTION # 133
An internal auditor has completed an audit of an organization's activities and is ready to issue a report. However, the client disagrees with the internal auditor's conclusions. The auditor should:
- A. Perform additional work, with the client's concurrence, to resolve the areas of disagreement and delay the issuance of the report until agreement is reached.
- B. Withhold the issuance of the audit report until agreement on the issues is obtained.
- C. Issue the audit report and state both the auditor and client positions and the reasons for the disagreement.
- D. Issue the audit report and omit the client's conclusion as it is not the opinion of the internal auditor.
Answer: C
NEW QUESTION # 134
Which of the following audit procedures is most suitable for verifying that all sales transactions have been recorded?
- A. Re-computation.
- B. Vouching.
- C. Observation.
- D. Tracing.
Answer: D
Explanation:
Section: Volume A
Explanation/Reference:
NEW QUESTION # 135
According to IIA guidance,when performing a compliance audit of data security standards for a large e- commerce retailer, which of the following would represent the least likely area of risk exposure?
- A. Physical security risks.
- B. Operational risks.
- C. Access risks.
- D. Change or configuration risks.
Answer: A
NEW QUESTION # 136
Which of the following statements is true regarding the communication of audit engagement observations?
- A. Criteria, condition, cause, and effect must be communicated for material observations and significant deficiencies only.
- B. Criteria, condition, cause, and effect must be communicated for material observations only.
- C. Criteria, condition, cause, and effect must be communicated for all engagement observations.
- D. Criteria, condition, cause, and effect do not need to be communicated for insignificant observations with adquate compensating key controls.
Answer: C
NEW QUESTION # 137
An internal auditor for a financial institution has just completed an audit of loan processing. Of the 81 loans approved by the loan committee, the auditor found seven loans which exceeded the approved amount. Which of the following actions would be inappropriate on the part of the auditor?
- A. Examine the seven loans to determine if there is a pattern. Summarize amounts and include in the engagement final communication.
- B. Follow up with the appropriate vice president and include the vice president's acknowledgment of the situation in the engagement final communication.
- C. Report the amounts to the loan committee and leave it up to them to correct. Take no further follow-up action at this time and do not include the items in the engagement final communication.
- D. Determine the amount of the differences and make an assessment as to whether the dollar differences are material. If the amounts are not material, not in violation of government regulations, and can be rationally explained, omit the observation from the engagement final communication.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION # 138
According to the International Professional Practices Framework, which of the following statements is true regarding the use of the statement, "Conducted in Conformance with the International Standards for the Professional Practice of Internal Auditing," when communicating results of a seven-year-old internal audit activity?
- A. The statement should not be used for a consulting engagement.
- B. The statement may be used only if the results of the quality assurance and improvement program support the statement.
- C. The statement may be used whether or not the internal audit department has an external quality assessment review or an independent validation of a self-assessment.
- D. The statement may be used only when conducting international engagements.
Answer: B
Explanation:
Section: Volume C
NEW QUESTION # 139
An internal auditor compares real-time gasoline production data to corresponding final gasoline production reports and finds minor but consistent daily discrepancies. If the auditor is concerned about theft, which of the following next steps is most consistent with IIA guidance?
- A. Confront the production manager and ask her to explain the differences between real-time and reported data.
- B. Contact security personnel as evidence suggests gasoline is being stolen from production premises.
- C. Review the processes used to collect the production data and to compile the final production reports.
- D. Reconcile online data and the final production reports to gasoline sales reports.
Answer: C
Explanation:
Section: Volume D
NEW QUESTION # 140
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